Flughafen Wien AG

Okay, so ladies and gentlemen, welcome to our conference call for the first nine months of 2022 of Vienna Airport. Today's presentation will be held as usual by our board members, Mr. Günter Hofner and Mr. Julian Jäger. The presentation will be followed by a Q&A session where you will be given the opportunity to ask your questions. During the Q&A session, I would like to ask those of you having questions to unmute themselves, introduce themselves, and then ask their questions. Alternatively, you can raise your virtual hand or write your questions into the chat window. If you are joining online, then you can easily unmute yourself by selecting the respective button in your menu. If you are joining by phone, please press star and six to unmute yourself. In the Q&A session, we will give preference to CELSAT analysts covering us, and only after their questions have been answered will we allow further questions. The call will be recorded and will be available on our website shortly. The slides of the presentation that will be held now are also available on our website under presentations. And now I would like to hand over to our CFO, Mr. Ofner. The floor is yours, sir. And I will now also share the slides.

Yeah. Good afternoon. And I can report that we have – good results after three quarters in 2022. We saw a significant passenger increase and also a substantial earnings increase compared to 2021. So passenger volumes went up to 22.3 million in the group and For the whole year, it's roughly three quarters of the pre-crisis level, but in summer, we almost were at 90%. The financial performance indicators show that we could transfer our additional revenue to a very high degree into EBITDA and net profits. And so we had a very high cost discipline that helped to improve the financial situation of the company. If we look at full year 22, we will see that we have a net profit of at least 150 million. It could be even more if the good development we saw in October will be followed by good results also for November and December. And so far, we had no negative interference, neither from the war against Ukraine, or new measures due to COVID. So these negative factors I think should not negatively affect the rest of the year. So I'm quite sure that our guidance will be not only fulfilled, but maybe even we will come out above the net result proposition we had so far. And what we can also confirm is that given the financial health of our company, we'll see later that we are more than debt-free, so that we even had a positive net position at the end of the third quarter. This will allow us that we will start to pay dividends again. I recently got the message that Fraport denied to pay a dividend. We can firmly confirm today that given the consents of our General Assembly, we will pay at least 60% of net profit after non-controlling interest as a dividend for 2022. If you look at the figures in detail, you see revenue up at 508, EBITDA at 256, so plus 140%, EBIT at 156.9, Also, a slight improvement in financial results, so earnings before tax at 150 and net profit for the period 109.3. If you deduct non-controlling interest, it's 97.8. If you look at our expenses, you see that consumables and services use, they are up 53.8, which is below passenger and traffic development. Personal expenses up 40.8, which is especially attributable to the fact that we only saw support for short-time work in the first quarter, and the program was stopped beginning 1st of April for the whole company. Other expenses were up by 111%. This is also reflecting the recent developments. You might ask to what degree we are affected by higher energy prices. And the good part of the story is that we bought electricity for 22 already five years ago. So we have profited from much lower prices prices we fixed in this period for 22, for a considerable part of our consumed electricity. And additionally, we had the advantage that roughly one third of our electricity was produced by our own. So through our big photovoltaic plants, which we will further develop in the coming year. So putting all that together, for 2022, we have been substantially shielded against the price hikes on the electricity side. This unfortunately is not the case on the district heating side. there we are exposed to gas prices and we have saved a lot of energy also there, but there we are much more exposed to the hiking market prices. Net liquidity at 61.7 million. It's debut for our company, so I don't know if anyone remembers when we had last time a net liquidity of 61.7 million. What I can remember, we have been heavily indebted at least for the last 20 years of our company, so that's really a very, very interesting point and it gives us now really a lot of room to maneuver in respect of future activities investments or even letting our shareholders participate on the financial health of our company so the gearing is below zero and we saw a very strong cash flow from operating activities of roughly 234 million. Free cash flow at minus 13, capex at 38. Our equity position was substantially improved and the equity ratio is at comfortable 65.7%. So, we saw a good development there. If you ask why free cash flow is on the negative side, this is due to payments for deposits where we are bound for a certain period of time, and where we earn higher interests than we had so far. Understandably, CapEx was at a low level for 22, and we will restart some investments in the coming year, especially regarding the south extension project, which should substantially contribute to our profitability further down the road. If you look at the share price development, we are still very far ahead of our main peers of Rapport and Zürich. And I hope we can keep and maintain this position. I already mentioned our guidance. So revenues should be at roughly 670 million or above. EBITDA should be above 290 group net profit, at least 150. 15, most likely even above. Net debt, as we guided, is definitely below 50 million. It will be on the positive side, and CapEx may reach a certain percentage of the 84 million but might stay somewhere around 70 at the end of the year. And I think all these developments are now more or less on the secure side because we are mid of November and there are no indications that major actions could stop again here. traveling. Very important for us as a company is that we will start CO2 neutral operations at our airport in 2023. So all the measures are on the way that are necessary. We have reduced our CO2 emissions compared to 2011 by 60,000 tons per year. And we will further improve our electricity production. So from 24 hectares in 22, we will move to roughly 45 hectares in 23. So we will increase the facility on our airport, but we will also add roughly 10 hectares in the airfield of Bad Veslau, which is also owned by us. And I think that it was very wise to start with all these measures already 10 years ago, so long before it was discussed in public, and therefore now we are, I think, substantially ahead of most of our peers and competitors. I also want to stress that you might remember that Austrian reduced their rentals on the airport, especially in Office Park 2. And I think it's given the actual situation very good news that for 50% of the rentals Austrian reduced, we already found a new partner and two floors of Office Park 2 will be rented in these days with the option to take even a third one so that overall we see still a very good interest of potential companies coming to the airport and this will also support our results for 2023. So that's from my side and I hand over to Julian for your part.

Thank you, Günter. Good afternoon, ladies and gentlemen. I will start with the traffic development. I think most of you followed the traffic results of the first three quarters. We saw a very strong third quarter with roughly a level of close to 90% of the pre-COVID 2019 levels. So summer was really, really strong. And overall, we are in Vienna now at roughly 73% of pre-COVID levels with 17.4 million passengers, in Malta at roughly 80% with 4.4 million passengers, and in Kosice already very close to the 2019 levels with 400,000 passengers. Overall, in the group, we are at 22.3 million minus 25%. yeah I would not want to go into more details here I think what is very very significant is the seed load factor although it's still the first four or five months were still very much disrupted by the pandemic but you can see here how strong the third quarter was and we are for the full year already on the same level as the seed load factors in 2019 so I think the good news is that And more or less all our airline customers had an excellent summer as well and making good money here in Vienna. Let's have a look at the next slide. You can see here that for the first nine months, Austrian had a market share of 47%, Ryanair 21%, and Wiesair 6.7%. So, if you look at the peak in summer, Austrian performed even a bit better with a market share of roughly 50%. Ryanair was at 20-21% and Visee at around 6%. The low-cost carriers overall had a market share of 31% and Lufthansa Group of 52%. You can see here that All airlines amongst the top 15 had a really strong growth versus 2021. Some perform even above 2019, like Turkish, like SunExpress. And you can see that, obviously, Southern Europe did extremely well over summer. Italy, Spain, Turkey, Greece were between plus 20 or plus 30% above the 2019 levels. What still... Legging behind is traffic to Germany, to Switzerland, to the UK. Those are the main countries, apart from the obvious complete losses from Russia and Ukraine. But apart from that, Germany still... around 30% below the 2019 level, Switzerland minus 40% below 2019 levels. So this is an area where there's still room for more capacity and for more passengers in the future. Let's have a look at October. October was still very strong, minus 14% versus 2019, 2.4 million passengers. versus 1.6 million in 2021 and 2.8 million in 2019. Transfer passengers performing a bit better than local passengers relative to 2019. Flight movements at minus 21%, and this is again a very important development for the airport. the planes are significantly bigger and significantly fuller than they used to be, which is good news for airside and runway capacity. And you can see here that the seed load factor throughout October this year was even two percentage points above the 2019 figures. The only negative on this slide, I would say, is cargo. You can see here that we are below the 2021 figures, and I think this is a trend we see definitely throughout Europe, throughout Germany, that cargo is going down versus 2019 and 2021, probably one of the signs of a looming recession in 2023. Let's move on to operations. I think, and this is something which makes us very proud, I think we had an excellent operation throughout summer, definitely compared to most other European airports. We are very happy that this was widely acknowledged in the industry and from our passengers as well. The Airports Council International Europe rated as the best airport in Europe this year. We recently got an Award from Asia, Ground Handle of the Year in Europe. In October, OHE just recently released punctuality figures where we came second after Helsinki in October and for the full year, we are number four in terms of punctuality. We constantly perform better than the other Lufthansa companies. airports in terms of punctuality. So I think as an airport and a hub system together with our hub carrier, Australian Airlines, I think the operational performance throughout the airport was really excellent this summer. And I think this is a good base as well to argue for higher prices and higher charges in the future. because our customers know that we are a reliable airport and that essentially all the processes work really, really well. Let's move on to the next slide. Yeah, having a look at winter. I mean, obviously, compared to last winter, this is a very strong development. But overall, my impression is that for the lower season, for the season outside the main holidays, airlines still are a bit cautious. So we expect that we will see a reduction in traffic now vis-à-vis 2019. In the coming months, we saw... We already see now a bit of a relief towards East Asia. So Africa is back, Korea is back, China is back. We expect some other long-haul carriers to join this list in the future as well. Canada obviously was already back this summer. I think we have a very strong Middle East portfolio now. And what is interesting as well, that we there moved away a bit from their – Central European destinations, and they're concentrating right now a lot on the Middle East, flying to Abu Dhabi, Dubai, three destinations in Saudi Arabia. So my impression is that the visa is very successful to find a niche, a mix of Middle East, sun and sea destinations within Europe, and the Bonwada city destination. Ryanair, eight new destinations, 70 destinations in total. So I think this is a strong sign that they are here to stay. And in Austria, I think the good news is they got four new Airbus A320neo. Now the first two are already in, the other two are coming next year. My best guess would be that Austria actually will have a bit more capacity here in Vienna than they had this summer. um and a total of 80 destinations um so overall i'm i'm happy with the the winter schedule and what we see so far from the summer schedule of next year is that our main airlines will have at least the capacity they had this summer and and obviously there's a lot of room for growth in the first four months um of next year vis-a-vis uh 2022 um so i'm already cautiously optimistic for next summer and next year, but we will give you obviously some more details in our assessment of the full traffic year 2023 than later on in January. In the group, we expect 29 million passengers this year. In Vienna, we expect more than 23 million, probably more 23.5 than the 23 you can see here. So overall, I think a successful year given the rocky start in the first quarter and the first four or five months of this year. So a few words regarding the segments. Airport had in Q123 essentially more than doubling the external revenue and EBITDA of 101 million and thanks God a positive EBIT of 42 million compared to the minus 14.3 million of last year. We saw strong increase in the passenger related fees as well as an increase in the aircraft related fees and in infrastructure fees, looking Into next year, it's our main aim to increase the net revenues per passenger in the airport segment. We will increase our airport charges by 5.6% with the 1st of January, covering the inflation until mid-2022. So there will be another increase on the 1st of January 2024, covering then the inflation from mid-2022. to the 2022 till mid 2023 so there's a bit of a delay in terms of um the reflection of inflation um but we are about to and we have not got approval yet but um we we applied for some changes in our uh incentive scheme so um with the with the increase of uh the um the airport charges by 5.6 plus and a reduction in incentives, we expect a significant increase in the net revenues next year. Let's move on to handling and security. Yeah, a positive EBIT here as well, 4.5 million, EBITDA of 11 million and external revenue of 91.8 million. So obviously the personal expenses increased here as well by 29.9 million. You mustn't forget, and this is something you have to appreciate, next year, looking at our figures in the first quarter, we still were in the Kurzarbeit regime, short working scheme of the Austrian government. So this was still very supportive in this year's staff costs. Overall, handling is doing well. And I'm fairly optimistic that we will manage to keep the very high reliability of our handling and security services into next year. And so overall, I think the development is very positive in this area. Retailing properties. Yeah, strong development as well. 52.9 million EBIT versus 20 million in 2021. EBITDA 67 million, external revenue 98 million. So I think in parking and center management, the results were excellent. Rental, obviously, you can see here the reduction of rent from Austrian Airlines. So that's why there's a slight decrease of 0.9%. But center management and hospitality plus 130%, parking plus 118%. So we managed to make more out of each passenger than in 2021. And overall, I have to say, center management and hospitality, given the passenger mix, hardly any Chinese, hardly any East Asians, no Russians, no Ukrainians. I'm fairly happy. Duty Free is doing very well. F&B is doing very well, where we feel the pinch is in the area of specialty retail. So I hope that in the future when the passenger mix changes again in our favor, then we will see here some even better results. But I think given the new mix, I'm very happy with the results of 2022. And obviously, Günter mentioned already the south extension. This will be a major change in how the Vienna airport appears to its customers. There will be 12,000 square meters additional F&B and retail space, 18 baskets directly under the commercial area, very comfortable waiting areas, new lounges. So, yeah, we are all looking forward to this project. Malta, there's one really good news which came in the recent weeks. Malta Airport got the 12 million tax credit from the Maltese government to make up for the losses which were incurred in the period of the pandemic. This obviously will improve the results even further. EBIT was at 33 million versus 6 million last year. EBITDA 43 million versus 16 million and external revenue essentially doubled with 66.5 million. Malta was a bit stricter in terms of COVID, which we had in the beginning of the year, but summer was good. And I think looking ahead, Malta will do next summer very well as well. Now there's a base of Wizz Air coming to Malta. There's the strong presence of Ryanair. and so I'm still optimistic that we will see growth from Malt Airport next year as well. I think that's it from my end and now we are happy to take your questions and looking forward to the discussion.

Okay, so thank you gentlemen. I would now like to open the floor for questions. So anybody who has a question, please unmute yourself and then introduce yourself and then ask your question, please. So the floor is open.

If I may, I would go ahead. It's Brent speaking from Raiffeisen.

Yeah, please go ahead.

Super. Thank you. Good afternoon, gentlemen. Three questions. I do have first the obvious one on the guidance. You have a slide showing the development of guidance throughout the financial year in September, then you upgraded, you hiked only the net profit guidance. What does it mean with reference to sales, especially EVTA and net debt guidance? Is this still in place as it is or not? Isn't it? Yeah, that's question number one. Question number two, in the annual, not annual report, quarterly report, you outlined some positive effects on personal expenses from changes in provisioning, from changes of tax rates, interest rates. Here would be interested how big this effect, this positive effect was in the third quarter. And finally, you also outlined the strong relative performance of the passenger development of Vienna airport versus German airports. I would be interested in your view or your arguments behind this. Is it as simple as a higher share of tourism and the lower share of business activity in general, which especially in 2022 kicked in these characteristics? Or do you see some more developments behind this?

Okay. I would like to start with guidance. I mean, I think you are partly on the right track. So there should be also a further improvement on EBITDA results. But we have not made a specific guidance for the rest of the year for that. But it's obvious that finally a higher net profit also be reflected in the positive deviation of EBITDA versus the figures you see now. Thanks for the clarification. Yeah, interest rates, I think we should deliver to you after our call because this needs maybe some deep dive about the figures in detail. But Rita, do you have any detail for that?

Yeah, just put it there, the interest is plus, the interest plus one percent is a, profit, a result of 4.5 million in the basis of 5.6% additional expense of 1.5 million. So for the for the whole Three quarters, it's 3.6 million in total. Income of 3.6 million.

Okay, so positive effect of 3.6 million you booked in personal expenses in Q1 to 3.

It's the whole year, so it's from January to September.

Thank you.

Sorry, in Q3 it was 0.9, so roughly 1 million.

Danke, super.

Regarding your last question, maybe a few comments. I think there are multiple reasons for the fact that we are performing better than Germany. And I think to a certain extent, it's already reflected in our passenger figures to Germany as well. There's less capacity than 2019. Just to give you an example, Berlin with just 50% of the capacity of 2019. So ticket prices are significantly higher. There's less low-cost traffic within Germany and out of Germany. And I think there is still a fact that you probably wouldn't travel for a one-hour, two-hour meeting to Frankfurt anymore. So I think it's It's to a certain extent that the business traffic did not come back. I think on the long haul, the business traffic is back. But on short haul, I think there's still the effect of teens. So I think it's a mix. But one part is definitely that there's less capacity that with this lower capacity that The airlines are making really good money on certain routes, and this obviously is not good for the passenger development. It's good for the airlines, but not necessarily for the airports.

Thank you very much.

Okay. Are there any other questions in the audience? Please come forward and ask your questions. Okay, then a final call from my side. Is everybody satisfied with the presentation and the questions? It seems, yeah. So final call. If anybody has a final question, please speak out now or else we will close the call.

Yes, so many thanks for your interest.

Thank you. Thank you. Have a nice day.

Have a good day.

Have a good day, and maybe as an organizational point to point out, we will have, as Mr. Jäger already said, on the 19th of January, we will have our presentation for the full-year traffic figures of 2022 and our forecast for 2023. Okay, with this, I wish you a nice day. Until the next time. Bye-bye.

Thank you. Bye.